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The Effects of the Financial Crisis on Cooperative Banks in Europe – A Critical Comparison –

Author

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  • Henselmann, Klaus
  • Ditter, Dominik
  • Lupp, Philipp

Abstract

The financial crisis has highlighted the necessity of discussions on the adequacy of banking regulation and accounting standard-setting for financial institutions. We compare the development of several variables in this context between commercial banks, cooperative banks and savings banks from 2005 through 2013, in order to investigate whether smaller banks such as cooperative banks or savings banks tended to be more robust to the financial crisis. We find that the volume of lending (loan loss provisioning) remained stable or increased (decreased) for smaller financial institutions. Furthermore, there is no significant increase in loss avoidance behavior specifically for cooperative banks. Cooperative banks are also the group of banks that showed the least pro-cyclical effects and the most income smoothing behavior. Our results suggest that cooperative banks were the group of banks being most stable during the years surrounding the financial crisis in 2007/2008. This demonstrates the importance that policy makers consider the broad range of financial institutions for discussions on policy adjustments.

Suggested Citation

  • Henselmann, Klaus & Ditter, Dominik & Lupp, Philipp, 2016. "The Effects of the Financial Crisis on Cooperative Banks in Europe – A Critical Comparison –," Working Papers in Accounting Valuation Auditing 2016-1, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Accounting and Auditing.
    • Handle: RePEc:zbw:fauacc:20161
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    Cited by:

    1. Vladislav Valentinov & Constantine Iliopoulos, 2021. "Social capital in cooperatives: an evolutionary Luhmannian perspective," Journal of Evolutionary Economics, Springer, vol. 31(4), pages 1317-1331, September.

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    More about this item

    Keywords

    Cooperative Banks; Financial Crisis; Loan Loss Provisioning; IFRS;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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